By David Bau
ST. PAUL, Minn. (10/26/2015)–Average corn and soybean budgets for cash-rented farmland will be unprofitable, according to projections based on currently available input costs and market prices for 2016.
To assist agricultural landowners, renters, agri-business professionals and others, University of Minnesota Extension educators will present 44 workshops throughout the state during November and December. A complete schedule for the “What is a Fair Farmland Rental Agreement?” workshops is on Extension’s Agricultural Business Management site and also at z.umn.edu/10lp. No registration is required.
Rents are the major input cost for soybeans and corn, accounting for 44.5 percent and 28.5 percent, respectively. Landlords with increasing property taxes increased rental rates during record prices. Now, they are trying to play catch up when budgets do not support current rental rates and other input costs.
Lower rental rates in 2016 would help struggling farmer tenants, but lowering those rates may require some tough negotiations.
A flexible rental agreement may be the best option for 2016. In this kind of agreement, both the landlord and farmer share the price risks; if prices improve, so does the rental payment. A flexible agreement also can factor in higher-than-average yields.
During the workshops, Extension ag business management professionals will lead discussions about current farmland rental rates, land values, leasing agreements and related financial issues for land owners, farmers, landlords, tenants and agri-business professionals. Presenters will provide examples and worksheets for both tenants and landlords covering the FairRent program, flexible leases, and fair rental agreements.
The “Cropland Rental Rates for Minnesota Counties” publication, which uses the FINBIN database, is a helpful resource. Find resources and current trends in farmland rental rates and land economics on the Extension website.
David Bau is an educator at the University of Minnesota Extension.